*: MILLENNIUM
CI fAU.EI\'GE CORPORATION
UNITED STATES OF AMERICA
Daniel W. Yohannes
Chief Execut ive Officer
February 23, 2010
The Honorable Jolm F. Kerry
Chairman
Senate Foreign Relations Committee
United States Senate
Washington, DC 20510-6225
The Honorable Richard O. Lugar
Ranking Member
Senate Foreign Relations Committee
United States Senate
Washington, DC 20510-6225
Dear Senators Kerry and Lugar:
Thank you for your recent letter detailing your views on the Millennium Challenge Corporation
(MCC) and MCC's work to reduce poverty. Before I respond, I want to reiterate my
appreciation for the swift consideration of my nomination as MCC's Chief Executive Officer
(CEO).
I am encouraged by your strong support for the MCC model and core principles, and appreciate
your thoughts on how to strengthen MCC's capacity to fight global poverty through economic
growth. MCC is actively weighing the strategic issues you outlined in your letter.
MCC has greatly benefited from ongoing consultations with the Senate Foreign Relations
Committee. I look forward to continuing a strong patinership with the Committee, which is vital
for MCC's continued success, and believe that we share similar priorities for the agency ­
demonstrating tangible results; pursuing greater innovation; and increasing collaboration with the
private sector, nongovernmental organizations, and other donors. To achieve these priorities,
MCC must continually refine elements of our approach to maximize policy reform incentives
and poverty reduction impacts in partner countries.
Your support for concurrent and longer compact authorities and their inclusion in S .2971, is of
critical importance to making MCC more effective. Concurrent compact authority will improve
MCC's ability to manage the compact pipeline with greater predictability and pursue greater
ilmovation. We intend to exercise authority for longer compacts only for particularly large or
complex projects. In addition, thank you for including the "maintaining country status"
provision in the State Reauthorization bill. This important change will enable MCC to maintain
a more predictable pipeline of compacts and to allocate human and capital resources accordingly.
Finally, as to regional compacts, I share your concerns and appreciate your guidance. While we
have no plans to make such compacts a priority, should a very attractive regional compact
opportunity present itself, MCC could explore it along the lines you suggest in your letter.
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The Honorable John F. Kerry
The Honorable Richard G. Lugar
February 23, 2010
Page 2
I share many of the concems that you raised about MCC's threshold program. Last year MCC
initiated a thorough review of the threshold program and continues to consult widely with
outside stakeholders on the program's future. Before our review is complete, MCC will brief the
Committee and continue this impOliant dialogue. There is a real need and an opportunity to
create incentives for ongoing policy reforms among candidate and partner countries. To the
extent that the threshold program can be more effective in doing that, I want to work with you to
make those changes.
A review of the country selection system also has been initiated to identify changes that will
allow MCC to better balance the identification of good policy perfonners with the objective of
reducing poveliy in countries with significant populations of poor people. This selection system
review entails rigorous analysis by MCC staff with important input from Congress and other
stakeholders.
I appreciate that there is a scarcity of resources available for foreign assistance. This year,
President Obama requested $1.28 billion for MCC's work to fight global poveliy. I am
committed to directing these funds to programs in pminer countries that have the greatest
promise for spurring economic growth and reducing poveliy. As standard practice, during this
year's arulUal country selection process, MCC's Board of Directors (Board) considered both the
current pipeline of countries and MCC's constrained resources, including restricted funding for
lower middle income countries. As a result, the Board properly considered, but did not select
any country as compact eligible for fiscal year 2010 that was not already eligible in a previous
year. In fact, only Cape Verde met MCC's stringent economic, policy, and project performance
criteria, and the Board selected it as eligible to apply for a second compact.
I welcome your encouragement for MCC to seek greater innovation in its work, which is also
one of my top priorities. On a recent trip to Ghana and Cape Verde, it was a pleasure for me to
personally see that the MCC model is quite innovative and our programs are achieving the
interim results that indicate progress toward reducing poveliy in a measurable and sustained way.
MCC responds to pminer countries' long-term development priorities, keeps countries in charge
during implementation, transparently projects and measures results, and holds firm on policy
performance criteria. The goals of these imlOvations include increasing sustainability, returns on
investment, and efficiency. However, MCC can go further in terms of program design, financing
mechanisms, and engaging with new partners, particularly the private sector.
Your letter states that the core principles on which MCC was founded (competitive selection of
countries based on policy performance across independent and transparent indicators, and
country ownership of compact design, development, and implementation) have allowed MCC to
become a development leader. These principles guide compact development to yield long-term
investments in agriculture and essential infrastructure such as roads, ports, ilTigation, and energy.
As CEO, I will ensure that MCC remains dedicated to these guiding principles.
MCC will continue to support Administration and congressional initiatives to reform and
improve U.S. development policies and programs. I am committed to MCC partnering with
The Honorable John F. Kerry
The Honorable Richard G. Lugar
February 23, 2010
Page 3
other USG development agencies to share lessons learned and collaborate based on respective
comparative advantages. MCC staff is lending its expeliise to the Presidential Study Directive
on global development policy and to the Department of State's Quadrennial Diplomacy and
Development Review. In addition, MCC coordinates with U.S . Govenunent counterpmis at the
program level in MCC countries. This is a practice that I would like to expand. USAID
Administrator Raj Shah and I have discussed enhancing the ways in which MCC and USAID can
work together to maximize our agencies' respective strengths, effectiveness, and impacts. I also
will work to strengthen MCC's collaboration with counterparts at OPIC, USTDA, and PEPFAR.
Again, thank you for your joint leadership on these important issues and for your strong suppOli
for the MCC model. I look forward to deepening our dialogue about the future of MCC and to
your continued guidance, support, and feedback, along with the substantive contributions of your
staff, which are critical to MCC's ongoing success. I value your recommendations and look
forward to a continued pminership.
Since 'ely,
JMi
o~~